Minister strips aide's power to issue mining contracts

Minister strips aide's power to issue mining contracts

JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana
confirmed yesterday he had stripped the director general of
mines, Kuntoro Mangkusubroto, of his authority to issue final
contracts of work to mining contractors.

But Sudjana, facing a barrage of reporter's questions, denied
the measure had anything to do with Kuntoro's indecisiveness over
issuing a contract of work to Bre-X Minerals of Canada pending
the resolution of its dispute with its local partners.

"It was simply an internal matter of my ministry and it was
within my authority to revoke the licensing power of the director
general. Outsiders are not entitled to know the reasons," Sudjana
said.

Reporters asked Sudjana many questions yesterday at a ceremony
for the signing of power supply contracts between the State
Electricity Company and private power generators, but none of the
questions touched upon the power deals.

All the questions focused on Sudjana's controversial decision
to revoke Kuntoro's licensing authority. Kuntoro is well
respected in the business community.

Kuntoro, who was at the ceremony, refused to answer any
questions, saying it was now the minister's matter.

Bre-X Minerals, which claims to have made the world's largest
gold discovery in Busang, East Kalimantan, with estimated
reserves of 30 million ounces, made a strategic alliance late
last month with Sigit Hardjojudanto, President Soeharto's eldest
son.

Bre-X granted Sigit's PT Panutan Duta a 10 percent carried
interest in two sections of the gold mine -- Busang I and Busang
II -- and a consultants fee of US$1 million a month for 40
months.

Bre-X announced last month it planned to lend PT Panutan money
to buy out its two Indonesian partners -- PT Krueng Gasui and PT
Sungai Atan Perdana.

But PT Krueng Gasui president Jusuf Merukh said early this
month that his company's and PT Sungai Atan's shares in the
Busang gold project were not for sale.

Analysts see Bre-X's strategic alliance with PT Panutan as a
short-cut to resolving its dispute with its Indonesian partners
which has delayed its final contract of work for the Busang gold
project.

Nonetheless, Kuntoro, who until the middle of last month had
the final authority on mining contracts of work, put Bre-X's
contract on hold pending the resolution of its dispute.

Sudjana issued decree No. 1409, dated Oct.17, 1996, to revoke
three previous minister of mines and energy rulings issued in
1985 and 1986 which vested contract-of-work licensing with the
director general of mines.

The latest decree transfers the licensing authority on mining
contracts directly to the minister of mines and energy,
restricting the director general of mines' responsibility to
mainly administrative work.

Sudjana said Bre-X's contract-of-work application was still
being assessed.

"Its application was only recently filed and it is still being
assessed. We cannot process it as quickly as frying a banana," he
retorted.

Early this year Kuntoro's office launched what businessmen
hail is an efficient information system for mining zoning.

The information system, developed for Rp 8 billion ($3.4
million), is designed to make investing in the country's mineral
industry easier. (bnt/vin)